The income-tax department has launched a probe against certain social media influencers and content creators on platforms like YouTube and Instagram for allegedly not showing their income and profits commensurate with their earnings, official sources said on Thursday. The department initiated the action last week after it searched about 10 YouTubers and other social media influencers — mostly young artistes and actors — in Kerala.
The sources said a "data analytics" investigation undertaken by the department found out that these social media influencers and online content creators are making "substantial" earnings but either not showing or under-reporting it in their income tax returns (ITRs) or filings, largely due to ignorance of tax laws.
Social media influencers and online content creators are those who have the power to address online and affect their audiences’ purchasing decisions or opinions about a product, service, brand or experience because of their authority, knowledge, position or relationship with their audience.
The individuals searched in Kerala were treated "very gently" by the tax department during the process of evidence gathering and even during the recording of their statements, the sources said. These individuals were also issued notices as part of taking forward the probe so that their "exact tax liability" is determined, they added.
Some more social media influencers located in other regions of the country have also been brought under a similar action and the department is scrutinising such social media activities of some celebrities too, the sources said.
According to the sources, the tax department has gathered "vital information" about these online influencers and content creators, such as the brand endorsements undertaken by them, paid and unpaid promotions done, expenditure incurred using multiple financial instruments like debit and credit cards, and their deals with social media platforms, such as YouTube and Instagram, where they earn money based on certain parameters like gathering social media engagements beyond a certain threshold.
The tax deducted at source (TDS) database was also harnessed by the department before searching these individuals and issuing notices to some others, the sources said. The Central Board of Direct Taxes (CBDT), the administrative authority of the I-T department, brought new TDS provisions last year regarding benefits received in a business or profession and said such perquisites can either be in cash or in kind or partly in both of these forms.
The Budget 2022-23 brought in a new section — 194R — in the I-T Act, which requires deduction of tax at source at the rate of 10 per cent by any person, providing any benefit or perquisite exceeding Rs 20,000 in a year to a resident, arising from the business or profession of such resident.
